Interest rate hike will have serious consequences for low-income families

Responding to the Bank of England's decision to increase interest rates by 0.5% - the 13th consecutive increase - Senior Economist at the Joseph Rowntree Foundation (JRF) Rachelle Earwaker said:

“Even if this is successful in bringing down inflation, today's higher than expected rate rise of 0.5 won’t lessen the pain many low-income families are about endure.

“This interest rate hike will have serious consequences for more than a million low-income mortgage holders going without essentials like food, clothes or unable to pay their bills. The full effects of previous rate rises have yet to be seen but what we know for certain is the twin threats of high inflation and now skyrocketing interest rates are weighing heavily on the people caught up in this storm.

“Even those without a mortgage will see their day-to-day lives become even more of a struggle without the lifeline of affordable credit which will all but disappear in light of these rates. Our research shows the staggering amount of people on low incomes who took on debt just to keep their finances afloat cannot be ignored.

“What’s clear is the UK Government is more than a spectator to this escalating crisis. Politicians must protect living standards now and in the future.

“This includes rebuilding the UK’s income safety net so that it reflects the actual cost of essentials, and investing in ways to reduce the UK’s future exposure to price increases across the economic system, including through stronger public services, housing market reform and greater energy efficiency and security.”